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Empirically-driven hierarchical classification of stock keeping units

Author

Listed:
  • Bacchetti, A.
  • Plebani, F.
  • Saccani, N.
  • Syntetos, A.A.

Abstract

This paper proposes a hierarchical multi-criteria classification method developed for inventory management purposes and applied in a case study of the spare parts business of a household appliance manufacturer. The classification method is built on the basis of SIX dimensions, resulting in 12 different classes of spare parts, for which differentiated forecasting and inventory policies are proposed and tested. The results of our simulation study demonstrate the reduction of the total logistics costs by about 20% whilst still achieving the specified target service level for each class. Even more importantly, the proposed approach is simple enough to be understood and applied by company managers, thus increasing the probability of its adoption (in the same or similar fashion) in other real world settings.

Suggested Citation

  • Bacchetti, A. & Plebani, F. & Saccani, N. & Syntetos, A.A., 2013. "Empirically-driven hierarchical classification of stock keeping units," International Journal of Production Economics, Elsevier, vol. 143(2), pages 263-274.
  • Handle: RePEc:eee:proeco:v:143:y:2013:i:2:p:263-274
    DOI: 10.1016/j.ijpe.2012.06.010
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    References listed on IDEAS

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    Cited by:

    1. Sheikh-Zadeh, Alireza & Rossetti, Manuel D. & Scott, Marc A., 2021. "Performance-based inventory classification methods for large-Scale multi-echelon replenishment systems," Omega, Elsevier, vol. 101(C).
    2. Hu, Qiwei & Boylan, John E. & Chen, Huijing & Labib, Ashraf, 2018. "OR in spare parts management: A review," European Journal of Operational Research, Elsevier, vol. 266(2), pages 395-414.
    3. Rego, José Roberto do & Mesquita, Marco Aurélio de, 2015. "Demand forecasting and inventory control: A simulation study on automotive spare parts," International Journal of Production Economics, Elsevier, vol. 161(C), pages 1-16.

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